Mr Khaw Boon Wan has outlined his priorities for the first two years of his term as the National Development Minister.
In his first speech on housing issues in Parliament on Wednesday, he said he will focus on the newlywed HDB first-timers and vulnerable families.
Mr Khaw said he is committed to help all newlywed first-timers earning below S$10,000 per month get their first HDB home as soon as possible.
This, he said, will help meet an important social objective of helping them to settle down and start their families.
Mr Khaw said: “Housing is a complex matter, and there are no instant solutions. But I am confident that we can address the temporary problem of (the) supply-demand imbalance, with clear improvements for the newly-weds and the vulnerable families within two years.
“This will bring happiness to many families. The other housing segments will take a longer time to fix, and I seek Singaporeans’ understanding and patience.”
Mr Khaw noted that while current public policies are sound, there is a need to make major policy adjustments along the way, to help the low and middle-class cope better with higher cost of living.
In the past two years, home prices shot up by 30 per cent in the HDB resale market, and 50 per cent in the private housing market, driven by global liquidity overflows and an imbalance in housing supply and demand in the domestic market.
The government is building 50,000 HDB flats in the first two years. This is the equivalent of a new Ang Mo Kio Town.
If demand remains strong beyond 2012, Mr Khaw said there are resources and capacity to build more than 100,000 HDB flats during the current term of government. This may include starting Build-To-Order (BTO) project launches in the proposed Bidadari estate, which can potentially house up to 12,000 units.
Planning for a new HDB town in Tengah will also start. The new town could have 56,000 HDB units when fully developed.
While no BTO projects will be launched in Tengah during this term of government, Mr Khaw said the infrastructure like earthworks, roads, drains, sewers, and other facilities will be put in.
Mr Khaw said as long as construction costs do not rise dramatically, the BTO prices will stabilise.
He said: I am tackling the issue of affordability head on… Since May, we have stabilised the prices of these BTO flats. We have moderated price changes such that after adjusting for differences in location, amenities and other physical attributes, the May, July and September BTO prices were roughly comparable to the prices of similar units in the April BTO launch. The upcoming BTO launch next month will repeat this pattern.
“Newlyweds eyeing new HDB flats do not need to worry that BTO price will run ahead of their income. As long as construction costs do not rise dramatically, the BTO prices will stabilise. In this way, new HDB flats will always be affordable to the newlywed first-timers, provided that their expectation is realistic.”
And for families with household incomes of below S$1,500 per month, the government will ramp up the supply of rental flats. This includes opening the disused workers’ quarters at the former Tanjong Pagar train station.
Mr Khaw said: “We are making some progress. Since May, we have housed an additional 1,400 families. We have reduced the waiting time for a rental unit to six months. We can expect further improvement in the next couple of years, as new rental blocks become available.”
Currently there are 44,000 families in HDB rental flats. They make up about five per cent of all HDB households. But another 1,600 families are waiting in the queue; 1 in 5 of these households is made up of divorcees or single parents with young children.
The current waiting period of six months for a rental unit will become shorter as new rental blocks become available.
Mr Khaw said he is also reviewing the rental structure, adding more rental tiers so that the incentive to work harder and earn more is not unwittingly diminished.
He said rental housing can only be part of the solution for a larger social problem of marriage failure, financial mismanagement, and the failure in family relationship. The minister is working with the Community Development, Youth and Sports Ministry as well as Voluntary Welfare Organisations to tackle this larger social problem upstream.
Mr Khaw acknowledged that there are other groups of home buyers: the singles, the second timers, the upgraders and the downgraders. He pledged to attend to them more fully in due course.
Separately, Mr Khaw also said he expects to better meet the needs of HDB second-timers next year as his ministry clears the outstanding demand from the first-timers progressively.
It is estimated that there are about 16,000 first-timer families still waiting to buy a new HDB flat, and each year brings in 15,000 new applicants.
Currently only five per cent of BTO flats are kept for second-timers, even though they make up 40 per cent of BTO applicants.
Mr Khaw said he hopes to raise the percentage allocation for second-timers in a year’s time to improve their chances of getting a flat. In turn, this will further reduce the demand in the HDB resale market.
By reducing the demand on the HDB resale market, resale prices should begin to moderate, benefiting other home buyers, like the singles.
As for calls by some industry players to remove the recent cooling measures for the property market, Mr Khaw said it is not quite time yet. That is because of the global economic uncertainties. He said the government will continue to monitor the market and make additional tweaks when necessary.